Cal. Educ. Code § 41206.03

(a) Pursuant to the implementing legislation of Proposition 98, for purposes of Section 8 of Article XVI of the California Constitution, appropriations for deficiencies or prior year adjustments shall be deemed to be appropriations in the fiscal year in which the deficiencies or prior year adjustments occurred, unless otherwise provided by law. Consistent with that principle, there is hereby established the Proposition 98 Cost Allocation Schedule, which shall be utilized by the Director of Finance to account for Proposition 98 appropriations in excess of the amounts required to satisfy the minimum funding obligation to school districts and community college districts pursuant to Section 8 of Article XVI of the California Constitution, as determined for each prior fiscal year pursuant to the certification process established in Sections 41206.01 and 41206.02, that are available for allocation for prior year deficiencies.

(b) If the Director of Finance determines, pursuant to the certification process established in Sections 41206.01 and 41206.02, that the state has applied moneys for the support of school districts and community college districts in an amount that exceeds the minimum amount required pursuant to Section 8 of Article XVI of the California Constitution for the fiscal year being certified, the excess, not to exceed 1 percent of the value of the Proposition 98 minimum funding obligation certified for the fiscal year, shall be credited to the Proposition 98 Cost Allocation Schedule and shall be allocated to meet Proposition 98 minimum funding obligations pursuant to subdivision (c). At no time shall the balance credited to the Proposition 98 Cost Allocation Schedule exceed 1 percent of the value of the Proposition 98 minimum funding obligation for the fiscal year being certified.

(d) If, after crediting all amounts attributable to the Proposition 98 Cost Allocation Schedule, there remains an outstanding balance in the minimum funding obligation to school districts and community college districts pursuant to Section 8 of Article XVI of the California Constitution for the fiscal year being certified, notwithstanding Section 13340 of the Government Code, the amounts necessary to satisfy that obligation are hereby appropriated from the General Fund to the Controller, without regard to fiscal years, for purposes of this subdivision. By no later than September 1 of each year, the Director of Finance shall provide in writing to the chairpersons of the committees in each house of the Legislature that consider appropriations and the Chairperson of the Joint Legislative Budget Committee a schedule for the allocation of the outstanding balance. By no later than October 1 of each year, the Director of Finance shall provide to the Controller a schedule for the allocation of the outstanding balance pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 13308 of the Government Code. The Controller shall allocate the outstanding balance based on the schedule provided to the Controller by the Director of Finance, unless an alternative plan for repayment of the outstanding obligation has already been adopted as part of the annual budget process, or is enacted in statute by no later than August 31. The plan set forth by the Director of Finance pursuant to this subdivision shall be published on the Department of Finance’s Internet Web site. The outstanding obligation shall be allocated as follows: (1) To school districts 89.07 percent in proportion to the enrollment in school districts as determined for purposes of Section 8.5 of Article XVI of the California Constitution. (2) To community college districts 10.93 percent in proportion to the enrollment in community college districts as determined for purposes of Section 8.5 of Article XVI of the California Constitution.